We expect to receive approximately $22,191,362 in net proceeds from the sale
of 3,125,000 ordinary shares offered by us in this offering (approximately
$25,599,812 if the underwriters exercise their over-allotment option in full),
after deducting the underwriting discounts and commissions and estimated
offering expenses payable by us.
We currently expect to use the net proceeds from this offering for:
. completing at least two advanced clinical trials of MG01CI for adult ADHD,
estimated at $6,000,000 each;
. Completing a Phase I/II clinical study in children for MG01CI, estimated at
$1,000,000 to $2,000,000;
. preparing for our proposed studies in adults and children for MG01CI,
including engaging the FDA in discussions related to protocols for the trials,
estimated at $1,000,000 to $3,000,000 ;
. evaluating MG01CI in Phase II trials for additional disorders of cognitive
function, estimated at $1,000,000 to $2,000,000; and
. the remainder for working capital and general corporate purposes.
The amounts and timing of our actual expenditures will depend upon numerous
factors, including the progress of our development and commercialization
efforts, the status of and results from our clinical trials, whether or not
we enter into strategic collaborations or partnerships, and our operating
costs and expenditures. Accordingly, our management will have significant
flexibility in applying the net proceeds of this offering.
We have no current understandings, commitments or agreements with respect to
any material acquisition of or investment in any technologies, products or
companies.
We expect to conduct two Phase III clinical trials for adult ADHD. We do not
expect that these funds will be adequate to complete the Phase III clinical
trials required for pediatric approval, which will require us to raise
additional funds for this purpose.

We face competition from established pharmaceutical and biotechnology companies
that currently market a wide range of drugs to treat ADHD. All of these
competitors have far greater marketing and research capabilities than us. We
also face potential competition from academic institutions, government
agencies and private and public research institutions, among others, which may
in the future develop products to treat ADHD. All of these companies and
institutions may have products in development that are superior to MG01CI. Our
commercial opportunity would be reduced significantly if our competitors
develop and commercialize products that are safer, more effective, more
convenient, have fewer side effects or are less expensive than MG01CI. Public
announcements regarding the development of competing drugs could adversely
affect the commercial potential of MG01CI.

Company Description

We are an emerging biopharmaceutical company primarily focused on the
development and commercialization of our proprietary drug, MG01CI, to treat
Attention Deficit Hyperactivity Disorder, or ADHD. The most common currently
available treatments for ADHD are stimulants that increase the brain

chemical
dopamine. Stimulants have significant side effects, and as controlled substances
have significant potential for misuse, abuse and addiction. MG01CI is a
non-stimulant with a different mechanism of action. MG01CI is a proprietary,
combined rapid onset/extended release formulation of the chemical Pyridoxine
Pyroglutamate, which is more broadly known as Metadoxine. Metadoxine has been
available since the 1980’s in immediate release forms for the acute treatment of
alcohol intoxication and the chronic treatment of alcoholic liver disease in
Italy, Portugal, Hungary, Russia, India, China, Mexico and Thailand. In
September 2011, we completed a 120-patient double-blind Phase II study in Israel
that showed significant improvement in clinical ADHD symptoms, and also showed
favorable tolerability with no significant side effects over a placebo. The
trial met all primary and secondary clinical endpoints showing statistically
significant improvement over the placebo-treated control group.
We plan to initiate discussions with the U.S. Food and Drug Administration, or
FDA, within six months from the date of this prospectus to seek approval, via an
Investigational New Drug, or IND, Application submission, to conduct advanced
clinical trials in the United States for the use of MGO1CI to treat ADHD in
adults. If such FDA approval of our IND Application is granted and if these and
any future clinical trials demonstrate the safety and efficacy of MGO1CI, we
will seek to obtain marketing approval from the FDA for MG01CI for use in
adults. We have similar plans to seek marketing approval in the European Union
and later in Japan. Following the successful completion of our next clinical
trial in adults, we will seek to obtain regulatory approvals for clinical
trials, via additional IND Application submissions, in order ultimately to
obtain marketing approval of MG01CI for use in children. The requirements to
conduct pediatric clinical trials are more stringent than those for adults. If
our requests for approval to conduct clinical trials are denied, or if our
clinical trials are unsuccessful, we will have to re-design our drug candidate
and conduct additional preliminary clinical trials after any necessary
regulatory approvals.
ADHD is one of the most common behavioral disorders in the world. It is
estimated that between 5% and 12% of children worldwide are affected by this
condition. Once believed to only affect children, ADHD is now known to persist
into adolescence and adulthood in a large number of cases, with approximately
46% of all adults who had ADHD as children continuing to have symptoms of the
disorder as adults. Approximately 95% of these adults experience impaired
inattention and executive function symptoms, of which approximately 35% also
experience hyperactivity-impulsivity symptoms.
ADHD is a treatable condition. The most commonly used therapeutic drugs are
stimulants (Schedule II, Controlled Substances), such as Ritalin, Adderall,
Vyvanse and Concerta, which are all dopaminergic (related to dopamine) compounds
with significant abuse and misuse potential because their use may lead to severe
psychological or physical dependence. In addition, stimulants have numerous side
effects, such as uncomfortable mental states, interference with sleep and
appetite, development of nervous ticks and potential cardiovascular effects
resulting from increased blood pressure. These side effects have limited
effective treatment in those taking the drugs and have also dramatically limited
medication adherence rates. Up to 30% to 50% of those who are prescribed
stimulants for ADHD either do not respond or cannot tolerate these treatments,
and only about 20% of those prescribed with stimulants renew their prescription
the following month. There also is a non-stimulant drug on the market called
Strattera (Atomoxetine), launched in 2003. This drug also has significant side
effects, such as fatigue, decreased appetite, sexual problems, palpitations,
increased heart rate and high blood pressure and also has regulatory warning
labels relating to suicidal thoughts and liver damage. Moreover, Strattera takes
6-10 weeks to achieve full clinical effectiveness. More recently, two additional
non-stimulant medications with similar safety and efficacy profiles were
approved for use only in children (Guanfacine and Clonidine). These two drugs
have not had significant commercial success and have not been proven effective
in adults. All approved ADHD drugs need to be carefully monitored by the
treating physician to optimize the dose, starting with a low dose and slowly
escalating to the most effective and tolerable dose.
In contrast to the most common available treatments which involve the use of
stimulants, MG01CI is a non-stimulant with a differentiated mechanism of action
that is neither dopaminergic (related to dopamine) nor noradrenergic (related to
norepinephrine). Our 120-patient Phase II study showed significant improvement
in clinical symptoms with higher response rates, and a more rapid onset than
available non-stimulants. The trial also demonstrated favorable tolerability
with no significant side effects over a placebo. MG01CI therefore potentially
represents a safer alternative to stimulant-based treatments and a more
tolerable and effective treatment than the non-stimulants which are currently in
the market. Additionally, because of its unique mechanism of action and specific
clinical effect on inattention and executive function, we believe that MG01CI
possibly may be useful in treating additional cognitive disorders.
---------
We are an Israeli corporation based in Tel Aviv and were incorporated in 2008.
Our principal executive offices are located at 35 Ehad Ha-Am Street, 4th
Floor, Tel-Aviv, Israel, and our telephone number is +972 72 220 4661. Our
website address is www.alcobra-pharma.com.

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